The Taskforce on Climate Related Financial Disclosure (TCFD) and the Bank of England held a conference outlining how companies across sectors are intending to conduct strategic planning and risk management processes for non-financial disclosures.
The event, which took place on 31 October 2017 focused on how scenario analysis can help companies and financial markets to assess climate risks and begin those processes. The four sessions looked at what scenario analysis is, how those scenarios can be used to help businesses deal with financial risk, and how climate related scenario analysis is currently being used in various sectors, as well as an overview of existing and emerging scenario tools.
The TCFD recommendations, released earlier this year, promote the voluntary risk assessment, strategic planning and disclosure to stakeholders by following four core elements: governance, strategy, risk management, and metrics and targets.
The speakers expressed the importance of scenario analysis across the value chain, partially because there are not yet many examples on how to implement the changes, and also because it needs to be shown to the investors. It was made clear that the same strategy will not apply to all companies, even those in the same sector because each company in their risk assessment approach has to look at their individual supply chains.
Attendees were particularly interested in the investor and shareholder views, how to determine risks and map their assets, as well as the length of time and costs to follow this process. Yet the majority were in favour of the process, deeming it necessary as many expect some form of non-financial disclosure to be legislated in future.